Edgar Filing: ULTRAPAR HOLDINGS INC

6-K

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report Of Foreign Private Issuer

Pursuant To Rule 13a-16 Or 15d-16 Of

The Securities Exchange Act Of 1934

For the month of August, 2018

Commission File Number: 001-14950

ULTRAPAR HOLDINGS INC.

(Translation of Registrant’s Name into English)

Avenida Brigadeiro Luis Antonio, 1343, 9º Andar

São Paulo, SP, Brazil 01317-910

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F X Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes No X

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes No X

ULTRAPAR HOLDINGS INC.

TABLE OF CONTENTS


ITEM
1.		Individual and Consolidated Interim Financial Information for the Three-Month Period Ended June 30, 2018 Report on Review of Interim Financial Information
2.		2Q18 Earnings release
3.		Board of Directors Minutes
4.		Notice to shareholders

(Convenience Translation into English from

the Original Previously Issued in Portuguese)

Ultrapar Participações S.A.

Individual and Consolidated

Interim Financial Information

for the Six-Month Period

Ended June 30, 2018 and

Report on Review of Interim

Financial Information

KPMG Auditores Independentes

Ultrapar Participações S.A. and Subsidiaries

Individual and Consolidated

Interim Financial Information

for the Six-Month Period Ended June 30, 2018

Table of Contents


Report on the Review of Quarterly Information			3
Balance Sheets			4 –5
Income Statements			6 – 7
Statements of Comprehensive Income			8 – 9
Statements of Changes in Shareholders’ Equity			10 –11
Statements of Cash Flows—Indirect Method			12 – 13
Statements of Value Added			14
Notes to the Interim Financial Information			15 –109

(Convenience Translation into English from the Original Previously Issued in Portuguese)

Report on the review of quarterly information—ITR

To the Shareholders, Directors and Management of

Ultrapar Participações S.A.

São Paulo, SP

Introduction

We have reviewed the accompanying individual and consolidated interim financial information of Ultrapar Participações S.A. (“Company”), comprised in the Quarterly Financial Information—ITR Form for the quarter ended June 30, 2018, which comprise the balance sheet as of June 30, 2018 and related statements of income, comprehensive income for the three and six-month period then ended and changes in shareholders’ equity and cash flows for the six-month period then ended, including the explanatory notes.

The Company’s Management is responsible for the preparation of the interim financial information in accordance with Technical Pronouncement CPC 21 (R1) Interim Financial Information and with International Standard IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board—IASB, such as for the presentation of these information in a manner consistent with the standards issued by the Brazilian Securities Commission, applicable to the preparation of the Quarterly Financial Information—ITR. Our responsibility is to express a conclusion on these interim financial information based on our review.

Scope of the review

Our review was carried out in accordance with the Brazilian and international review standards for interim information (NBC TR 2410—Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410—Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the individual and consolidated interim financial information included in the quarterly information referred to above was not prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34, issued by the IASB applicable to the preparation of Quarterly Financial Information – ITR and presented in accordance with the standards issued by the Brazilian Securities Commission—CVM.

Other matters

Interim statements of value added

The individual and consolidated statements of value added for the six-month period ended June 30, 2018, prepared under the responsibility of the Company’s management, and presented as supplementary information for the purposes of IAS 34, were submitted to the same review procedures followed together with the review of the Company’s interim financial information. In order to form our conclusion, we evaluated whether these statements are reconciled to the interim financial information and to the accounting records, as applicable, and whether their form and content are in accordance with the criteria set on Technical Pronouncement CPC 09—Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the accompanying statements of value added are not prepared, in all material respects, in accordance with the individual and consolidated interim financial information taken as a whole.

São Paulo, August 1st, 2018

KPMG Auditores Independentes

CRC 2SP014428/O-6

Original report in Portuguese signed by

Wagner Bottino

Accountant CRC 1SP196907/O-7

Ultrapar Participações S.A. and Subsidiaries

Balance Sheets

as of June 30, 2018 and December 31, 2017

(In thousands of Brazilian Reais)


			Parent				Consolidated
Assets	Note		06/30/2018		12/31/2017		06/30/2018		12/31/2017
					Restated				Restated
Current assets
Cash and cash equivalents		4		474,503		93,174		3,940,363		5,002,004
Financial investments and hedging instruments		4		579,491		21,657		2,029,689		1,283,498
Trade receivables and reseller financing, net		5		—		—		4,403,577		4,147,894
Inventories, net		6		—		—		3,076,539		3,513,577
Recoverable taxes, net		7		39,982		33,070		965,672		881,584
Dividends receivable				5,842		27,930		5,842		11,137
Other receivables				3,087		2,404		113,233		44,025
Prepaid expenses, net		10		1,603		1,597		155,192		150,046
Contractual assets with customers – exclusive rights, net		11		—		—		471,084		456,213

Total current assets				1,104,508		179,832		15,161,191		15,489,978
Non-current assets
Financial investments and hedging instruments		4		—		—		149,215		84,426
Trade receivables and reseller financing, net		5		—		—		350,820		329,991
Related parties		8.a		761,454		762,562		490		490
Deferred income and social contribution taxes		9.a		5,181		29,158		727,949		614,061
Recoverable taxes, net		7		48,685		48,685		403,712		313,242
Escrow deposits		21.a		—		148		839,255		822,660
Indemnity asset – business combination		21.c		—		—		202,415		202,352
Other receivables				—		—		2,119		7,918
Prepaid expenses, net		10		35		—		372,421		346,886
Contractual assets with customers – exclusive rights, net		11		—		—		1,012,215		1,046,147

Total long term assets				815,355		840,553		4,060,611		3,768,173
Investments
In subsidiaries		12.a		8,923,689		9,268,261		—		—
In joint-ventures		12.a; 12.b		25,589		54,739		101,987		122,061
In associates		12.c		—		—		24,116		25,341
Other				—		—		2,793		2,792
Property, plant, and equipment, net		13		—		—		7,062,571		6,634,528
Intangible assets, net		14		246,163		246,163		2,259,649		2,162,638

				9,195,441		9,569,163		9,451,116		8,947,360
Total non-current assets				10,010,796		10,409,716		13,511,727		12,715,533

Total assets				11,115,304		10,589,548		28,672,918		28,205,511

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Balance Sheets

as of June 30, 2018 and December 31, 2017

(In thousands of Brazilian Reais)


			Parent						Consolidated
Liabilities	Note		06/30/2018			12/31/2017			06/30/2018			12/31/2017
						Restated						Restated
Current liabilities
Loans and hedging instruments		15		—			—			3,013,326			1,819,766
Debentures		15.g		34,325			817,654			1,112,508			1,681,199
Finance leases		15.i		—			—			2,781			2,710
Trade payables		16		85			461			1,650,995			2,155,498
Salaries and related charges		17		235			244			344,007			388,118
Taxes payable		18		758			343			257,435			221,529
Dividends payable		25.h		13,069			335,930			14,532			338,845
Income and social contribution taxes payable				—			—			31,192			86,836
Post-employment benefits		19.b		—			—			30,059			30,059
Provision for asset retirement obligation		20		—			—			4,416			4,799
Provision for tax, civil, and labor risks		21.a		—			—			60,889			64,550
Trade payables – customers and third parties’ indemnification		22		—			—			41,018			72,216
Other payables				6,210			7,439			111,130			125,150
Deferred revenue		23		—			—			17,750			18,413

Total current liabilities				54,682			1,162,071			6,692,038			7,009,688
Non-current liabilities
Loans and hedging instruments		15		—			—			5,373,387			6,113,545
Debentures		15.g		1,722,427			—			5,498,156			3,927,569
Finance leases		15.i		—			—			44,576			45,805
Related parties		8.a		5,201			4,003			4,139			4,185
Deferred income and social contribution taxes		9.a		—			—			35,761			38,524
Post-employment benefits		19.b		—			—			218,334			207,464
Provision for asset retirement obligation		20		—			—			54,319			59,975
Provision for tax, civil, and labor risks		21.a; 21.c		982			982			871,335			861,246
Deferred revenue		23		—			—			12,704			12,896
Subscription warrants – indemnification		24		97,738			171,459			97,738			171,459
Other payables				—			—			202,722			162,834

Total non-current liabilities				1,826,348			176,444			12,413,171			11,605,502
Shareholders’ equity
Share capital		25.a; 25.f		5,171,752			5,171,752			5,171,752			5,171,752
Equity instrument granted		25.b		2,180			536			2,180			536
Capital reserve		25.d		545,396			549,778			545,396			549,778
Treasury shares		25.c		(484,085	)		(482,260	)		(484,085	)		(482,260	)
Revaluation reserve on subsidiaries		25.e		4,813			4,930			4,813			4,930
Profit reserves		25.f		3,629,851			3,629,851			3,629,851			3,629,851
Retained earnings				315,559			—			315,559			—
Valuation adjustments		25.g		(48,641	)		159,643			(48,641	)		159,643
Cumulative translation adjustments		25.g		97,449			53,061			97,449			53,061
Additional dividends to the minimum mandatory dividends		25.h		—			163,742			—			163,742

Shareholders’ equity attributable to:
Shareholders of the Company				9,234,274			9,251,033			9,234,274			9,251,033
Non-controlling interests in subsidiaries				—			—			333,435			339,288

Total shareholders’ equity				9,234,274			9,251,033			9,567,709			9,590,321

Total liabilities and shareholders’ equity				11,115,304			10,589,548			28,672,918			28,205,511

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Income Statements

For the six-month period ended June 30, 2018 and 2017

(In thousands of Brazilian Reais, except earnings per share)


			Parent						Consolidated
	Note		01/01/2018 to 06/30/2018			01/01/2017 to 06/30/2017			01/01/2018 to 06/30/2018			01/01/2017 to 06/30/2017
						Restated						Restated
Net revenue from sales and services		26		—			—			43,396,707			37,540,770
Cost of products and services sold		27		—			—			(40,416,361	)		(34,523,784	)

Gross profit				—			—			2,980,346			3,016,986
Operating income (expenses)
Selling and marketing		27		—			—			(1,333,919	)		(1,212,318	)
General and administrative		27		—			—			(770,129	)		(751,820	)
Gain (loss) on disposal of property, plant and equipment and intangibles		28		—			—			(4,584	)		(150	)
Other operating income, net		29		(255	)		—			(227,853	)		62,911

Operating income before financial income (expenses) and share of profit of subsidiaries, joint ventures and associates				(255	)		—			643,861			1,115,609
Financial income		30		119,137			55,416			304,599			301,299
Financial expenses		30		(49,275	)		(76,367	)		(475,983	)		(535,319	)

Financial result, net				69,862			(20,951	)		(171,384	)		(234,020	)
Share of profit of subsidiaries, joint ventures and associates		12		270,159			602,920			(6,377	)		12,087

Income before income and social contribution taxes				339,766			581,969			466,100			893,676

Income and social contribution taxes
Current		9.b; 9c		(345	)		(2,187	)		(140,270	)		(308,416	)
Deferred		9.b		(23,977	)		8,322			(12,310	)		6,050

				(24,322	)		6,135			(152,580	)		(302,366	)
Net income for the period				315,444			588,104			313,520			591,310

Net income for the period attributable to:
Shareholders of the Company				315,444			588,104			315,444			588,104
Non-controlling interests in subsidiaries				—			—			(1,924	)		3,206
Earnings per share (based on weighted average number of shares outstanding) – R$
Basic		31		0.5819			1.0855			0.5819			1.0855
Diluted		31		0.5780			1.0777			0.5780			1.0777

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Income Statements

For the three-month period ended June 30, 2018 and 2017

(In thousands of Brazilian Reais, except earnings per share)


			Parent						Consolidated
	Note		04/01/2018 to 06/30/2018			04/01/2017 to 06/30/2017			04/01/2018 to 06/30/2018			04/01/2017 to 06/30/2017
						Restated						Restated
Net revenue from sales and services		26		—			—			22,645,585			18,996,200
Cost of products and services sold		27		—			—			(21,186,536	)		(17,536,309	)

Gross profit				—			—			1,459,049			1,459,891
Operating income (expenses)
Selling and marketing		27		—			—			(662,472	)		(615,168	)
General and administrative		27		—			—			(397,561	)		(389,242	)
Gain (loss) on disposal of property, plant and equipment and intangibles		28		—			—			(2,354	)		6,203
Other operating income, net		29		(287	)		(1	)		34,870			6,576

Operating income before financial income (expenses) and share of profit of subsidiaries, joint ventures and associates				(287	)		(1	)		431,532			468,260
Financial income		30		99,524			24,662			192,155			136,938
Financial expenses		30		(28,762	)		(39,402	)		(256,574	)		(249,783	)

Financial result, net				70,762			(14,740	)		(64,419	)		(112,845	)
Share of profit of subsidiaries, joint ventures and associates		12		195,669			246,239			(3,396	)		5,659

Income before income and social contribution taxes				266,144			231,498			363,717			361,074

Income and social contribution taxes
Current		9.b; 9c		(256	)		(1,066	)		(18,207	)		(118,226	)
Deferred		9.b		(24,299	)		5,110			(104,841	)		(6,244	)

				(24,555	)		4,044			(123,048	)		(124,470	)
Net income for the period				241,589			235,542			240,669			236,604

Net income for the period attributable to:
Shareholders of the Company				241,589			235,542			241,589			235,542
Non-controlling interests in subsidiaries				—			—			(920	)		1,062
Earnings per share (based on weighted average number of shares outstanding) – R$
Basic		31		0.4457			0.4347			0.4457			0.4347
Diluted		31		0.4427			0.4316			0.4427			0.4316

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Comprehensive Income

For the six-month period ended June 30, 2018 and 2017

(In thousands of Brazilian Reais)


			Parent						Consolidated
	Note		01/01/2018 to 06/30/2018			01/01/2017 to 06/30/2017			01/01/2018 to 06/30/2018			01/01/2017 to 06/30/2017
						Restated						Restated
Net income for the period attributable to shareholders of the Company				315,444			588,104			315,444			588,104
Net income for the period attributable to non-controlling interests in subsidiaries				—			—			(1,924	)		3,206

Net income for the period				315,444			588,104			313,520			591,310

Items that are subsequently reclassified to profit or loss:
Fair value adjustments of financial instruments of subsidiaries, net		25.g		(210,532	)		(5,158	)		(210,532	)		(5,158	)
Fair value adjustments of financial instruments of joint ventures, net		25.g		2,547			3,762			2,547			3,762
Cumulative translation adjustments, net of hedge of net investments in foreign operations and income and social contribution taxes		25.g		44,388			3,944			44,388			3,944
Items that are not subsequently reclassified to profit or loss:
Losses of post-employment benefits of subsidiaries, net		25.g		(299	)		(24	)		(299	)		(24	)

Total comprehensive income for the period				151,548			590,628			149,624			593,834

Total comprehensive income for the period attributable to shareholders of the Company				151,548			590,628			151,548			590,628
Total comprehensive income for the period attributable to non-controlling interest in subsidiaries				—			—			(1,924	)		3,206

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Comprehensive Income

For the three-month period ended June 30, 2018 and 2017

(In thousands of Brazilian Reais)


			Parent						Consolidated
	Note		04/01/2018 to 06/30/2018			04/01/2017 to 06/30/2017			04/01/2018 to 06/30/2018			04/01/2017 to 06/30/2017
						Restated						Restated
Net income for the period attributable to shareholders of the Company				241,589			235,542			241,589			235,542
Net income for the period attributable to non-controlling interests in subsidiaries				—			—			(920	)		1,062

Net income for the period				241,589			235,542			240,669			236,604

Items that are subsequently reclassified to profit or loss:
Fair value adjustments of financial instruments of subsidiaries, net		25.g		(198,560	)		(53,520	)		(198,560	)		(53,520	)
Fair value adjustments of financial instruments of joint ventures, net		25.g		1,861			3,168			1,861			3,168
Cumulative translation adjustments, net of hedge of net investments in foreign operations and income and social contribution taxes		25.g		63,784			2,622			63,784			2,622
Items that are not subsequently reclassified to profit or loss:
Losses of post-employment benefits of subsidiaries, net		25.g		—			—			—			—

Total comprehensive income for the period				108,674			187,812			107,754			188,874

Total comprehensive income for the period attributable to shareholders of the Company				108,674			187,812			108,674			187,812
Total comprehensive income for the period attributable to non-controlling interest in subsidiaries				—			—			(920	)		1,062

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Changes in Shareholders’ Equity

For the six-month period ended June 30, 2018 and 2017

(In thousands of Brazilian Reais)


																Profit reserve																Shareholders’ equity attributable to:
	Note		Share capital		Equity instrument granted		Capital reserve			Treasury shares			Revaluation reserve on subsidiaries			Legal reserve		Investments statutory reserve			Valuation adjustments			Cumulative translation adjustments		Retained earnings			Additional dividends to the minimum mandatory dividends			Shareholders of the Company			Non-controlling interests in subsidiaries			Consolidated shareholders’ equity
Balance as of December 31, 2017				5,171,752		536		549,778			(482,260	)		4,930			629,144		3,130,935			159,643			53,061		—			163,742			9,381,261			339,571			9,720,832
Effects of IFRS adoption		2.y		—		—		—			—			—			—		(130,228	)		—			—		—			—			(130,228	)		(283	)		(130,511	)

Balance as of December 31, 2017—Restated				5,171,752		536		549,778			(482,260	)		4,930			629,144		3,000,707			159,643			53,061		—			163,742			9,251,033			339,288			9,590,321
Net income for the period				—		—		—			—			—			—		—			—			—		315,444			—			315,444			(1,924	)		313,520
Other comprehensive income:
Fair value adjustments of available for sale, net of income taxes		25.g		—		—		—			—			—			—		—			(207,985	)		—		—			—			(207,985	)		—			(207,985	)
Actuarial losses of post-employment benefits, net of income taxes		25.g		—		—		—			—			—			—		—			(299	)		—		—			—			(299	)		—			(299	)
Currency translation of foreign subsidiaries, including the effect of net investments hedge		25.g		—		—		—			—			—			—		—			—			44,388		—			—			44,388			—			44,388

Total comprehensive income for the period				—		—		—			—			—			—		—			(208,284	)		44,388		315,444			—			151,548			(1,924	)		149,624
Equity instrument granted		25.b		—		1,644		—			—			—			—		—			—			—		—			—			1,644			—			1,644
Stock plan		8.c; 25.c		—		—		(4,382	)		(1,825	)		—			—		—			—			—		—			—			(6,207	)		—			(6,207	)
Realization of revaluation reserve of subsidiaries		25.e		—		—		—			—			(117	)		—		—			—			—		117			—			—			—			—
Income and social contribution taxes on realization of revaluation reserve of subsidiaries		25.e		—		—		—			—			—			—		—			—			—		(2	)		—			(2	)		—			(2	)
Additional dividends attributable to non-controlling interests				—		—		—			—			—			—		—			—			—		—			—			—			(3,929	)		(3,929	)
Approval of additional dividends by the Shareholders’ Meeting		25.h		—		—		—			—			—			—		—			—			—		—			(163,742	)		(163,742	)		—			(163,742	)

Balance as of June 30, 2018				5,171,752		2,180		545,396			(484,085	)		4,813			629,144		3,000,707			(48,641	)		97,449		315,559			—			9,234,274			333,435			9,567,709

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Changes in Shareholders’ Equity

For the six-month period ended June 30, 2018 and 2017

(In thousands of Brazilian Reais)


															Profit reserve																			Shareholders’ equity attributable to:
	Note		Share capital		Equity instrument granted		Capital reserve		Treasury shares			Revaluation reserve on subsidiaries			Legal reserve		Investments statutory reserve			Retention of profits			Valuation adjustments			Cumulative translation adjustments		Retained earnings			Additional dividends to the minimum mandatory dividends			Shareholders of the Company			Non-controlling interests in subsidiaries			Consolidated shareholders’ equity
Balance as of December 31, 2016				3,838,686		—		552,038		(483,879	)		5,339			550,428		2,582,898			1,333,066			(23,987	)		7,519		—			165,515			8,527,623			30,935			8,558,558
Effects of IFRS adoption		2.y		—		—		—		—			—			—		(82,427	)		—			—			—		—			—			(82,427	)		(81	)		(82,508	)

Balance as of December 31, 2016—Restated				3,838,686		—		552,038		(483,879	)		5,339			550,428		2,500,471			1,333,066			(23,987	)		7,519		—			165,515			8,445,196			30,854			8,476,050
Net income for the period				—		—		—		—			—			—		—			—			—			—		588,104			—			588,104			3,206			591,310
Other comprehensive income:
Fair value adjustments of available for sale, net of income taxes		25.g		—		—		—		—			—			—		—			—			(1,396	)		—		—			—			(1,396	)		—			(1,396	)
Actuarial losses of post-employment benefits, net of income taxes		25.g		—		—		—		—			—			—		—			—			(24	)		—		—			—			(24	)		—			(24	)
Currency translation of foreign subsidiaries, including the effect of net investments hedge		25.g		—		—		—		—			—			—		—			—			—			3,944		—			—			3,944			—			3,944

Total comprehensive income for the period				—		—		—		—			—			—		—			—			(1,420	)		3,944		588,104			—			590,628			3,206			593,834
Capital increase with reserves		25.f		1,333,066		—		—		—			—			—		—			(1,333,066	)		—			—		—			—			—			—			—
Sale of treasury shares		25.c		—		—		3,114		3,685			—			—		—			—			—			—		—			—			6,799			—			6,799
Realization of revaluation reserve of subsidiaries		25.e		—		—		—		—			(285	)		—		—			—			—			—		285			—			—			—			—
Income and social contribution taxes on realization of revaluation reserve of subsidiaries		25.e		—		—		—		—			—			—		—			—			—			—		(75	)		—			(75	)		—			(75	)
Additional dividends attributable to non-controlling interests				—		—		—		—			—			—		—			—			—			—		—			—			—			(7,479	)		(7,479	)
Approval of additional dividends by the Shareholders’ Meeting		25.h		—		—		—		—			—			—		—			—			—			—		—			(165,515	)		(165,515	)		—			(165,515	)

Balance as of June 30, 2017—Restated				5,171,752		—		555,152		(480,194	)		5,054			550,428		2,500,471			—			(25,407	)		11,463		588,314			—			8,877,033			26,581			8,903,614

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Cash Flows—Indirect Method

For the six-month period ended June 30, 2018 and 2017

(In thousands of Brazilian Reais)


			Parent						Consolidated
	Note		06/30/2018			06/30/2017			06/30/2018			06/30/2017
						Restated						Restated
Cash flows from operating activities
Net income for the period				315,444			588,104			313,520			591,310
Adjustments to reconcile net income to cash provided by operating activities
Share of loss (profit) of subsidiaries, joint ventures and associates		12		(270,159	)		(602,920	)		6,377			(12,087	)
Amortization of contractual assets with customers – exclusive rights		11		—			—			196,680			247,577
Depreciation and amortization		13;14		—			—			392,030			337,333
PIS and COFINS credits on depreciation		13;14		—			—			8,079			6,510
Interest, monetary, and foreign exchange rate variations				(27,625	)		73,511			523,658			397,423
Deferred income and social contribution taxes		9.b		23,977			(8,322	)		12,310			(6,050	)
(Gain) loss on disposal of property, plant and equipment and intangibles		28		—			—			4,584			150
Estimated losses on doubtful accounts				—			—			49,299			74,983
Provision for losses in inventories				—			—			965			(104	)
Provision for post-employment benefits				—			—			8,878			6,116
Other provisions and adjustments				3			2			(316	)		145

				41,640			50,375			1,516,064			1,643,306
(Increase) decrease in current assets
Trade receivables and reseller financing		5		—			—			(305,592	)		86,275
Inventories		6		—			—			439,281			177,577
Recoverable taxes		7		(6,912	)		10,151			(80,258	)		(13,147	)
Dividends received from subsidiaries and joint-ventures				504,934			465,804			37,515			15,333
Insurance and other receivables				(683	)		2,054			(64,347	)		296,486
Prepaid expenses		10		(6	)		(76	)		(5,146	)		(26,430	)
Contractual assets with customers – exclusive rights		11		—			—			(14,871	)		(6,702	)
Increase (decrease) in current liabilities
Trade payables		16		(378	)		(209	)		(504,503	)		(544,229	)
Salaries and related charges		17		(9	)		39			(44,111	)		(37,457	)
Taxes payable		18		415			(134	)		35,906			(8,638	)
Income and social contribution taxes				—			—			24,929			271,360
Post-employment benefits		19.b		—			—			—			(1,729	)
Provision for tax, civil, and labor risks		21.a		—			—			(3,661	)		(2,222	)
Insurance and other payables				(7,439	)		—			(61,605	)		33,303
Deferred revenue		23		—			—			(663	)		(1,023	)
(Increase) decrease in non-current assets
Trade receivables and reseller financing		5		—			—			(20,829	)		(25,210	)
Recoverable taxes		7		—			(15,849	)		(90,470	)		(75,788	)
Escrow deposits				148			—			(16,504	)		(23,123	)
Other receivables				—			—			5,799			1,273
Prepaid expenses		10		(35	)		—			(25,535	)		(71,749	)
Contractual assets with customers – exclusive rights		11		—			—			14,260			11,452
Increase (decrease) in non-current liabilities
Post-employment benefits		19.b		—			—			1,693			1,411
Provision for tax, civil, and labor risks		21.a		—			(589	)		10,108			(78,918	)
Other payables				—			—			39,888			(2,879	)
Deferred revenue		23		—			—			(192	)		345
Payments of contractual assets with customers – exclusive rights				—			—			(177,008	)		(282,801	)
Income and social contribution taxes paid				—			—			(80,573	)		(366,074	)

Net cash provided by operating activities				531,675			511,566			629,575			970,002

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Cash Flows—Indirect Method

For the six-month period ended June 30, 2018 and 2017

(In thousands of Brazilian Reais)


			Parent						Consolidated
	Note		06/30/2018			06/30/2017			06/30/2018			06/30/2017
						Restated						Restated
Cash flows from investing activities
Financial investments, net of redemptions				(557,834	)		(65,304	)		(794,682	)		(124,153	)
Cash and cash equivalents of subsidiary acquired		3.c		—			—			3,662			—
Acquisition of property, plant, and equipment		13		—			—			(575,436	)		(513,808	)
Acquisition of intangible assets		14		—			—			(125,317	)		(91,731	)
Acquisition of companies		3.c		—			—			(103,373	)		—
Capital increase in joint ventures		12.b		—			—			(16,000	)		—
Capital reduction in associates		12.c		—			—			1,250			—
Proceeds from disposal of property, plant and equipment and intangibles		28		—			—			10,884			32,899

Net cash used in investing activities				(557,834	)		(65,304	)		(1,599,012	)		(696,793	)

Cash flows from financing activities
Loans and debentures
Proceeds		15		1,721,596			—			2,219,826			1,697,757
Repayments		15		(800,000	)		—			(1,543,952	)		(796,114	)
Interest paid		15		(29,811	)		(55,578	)		(307,082	)		(410,442	)
Payments of financial lease		15.i		—			—			(2,558	)		(2,612	)
Dividends paid				(486,603	)		(470,801	)		(488,055	)		(480,477	)
Sale of treasury shares		25.c		—			6,799			—			—
Related parties		8.a		2,306			(2,076	)		(46	)		—

Net cash provided by (used in) financing activities				407,488			(521,656	)		(121,867	)		8,112

Effect of exchange rate changes on cash and cash equivalents in foreign currency				—			—			29,663			33,879

Increase (decrease) in cash and cash equivalents				381,329			(75,394	)		(1,061,641	)		315,200

Cash and cash equivalents at the beginning of the period		4		93,174			127,944			5,002,004			4,274,158
Cash and cash equivalents at the end of the period		4		474,503			52,550			3,940,363			4,589,358

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Value Added

For the six-month period ended June 30, 2018 and 2017

(In thousands of Brazilian Reais, except percentages)


			Parent										Consolidated
	Note		06/30/2018		%		06/30/2017			%			06/30/2018			%		06/30/2017			%
Revenue								Restated											Restated
Gross revenue from sales and services, except rents and royalties		26		—				—						45,074,685					38,906,977
Rebates, discounts, and returns		26		—				—						(507,020	)				(461,002	)
Estimated losses on doubtful accounts—allowance				—				—						(49,299	)				(74,983	)
Gain (loss) on disposal of property, plant and equipment and intangibles and other operating income, net		28;29		—				—						(232,437	)				62,761

				—				—						44,285,929					38,433,753
Materials purchased from third parties
Raw materials used				—				—						(2,995,333	)				(2,421,100	)
Cost of goods, products, and services sold				—				—						(37,312,066	)				(31,810,367	)
Third-party materials, energy, services, and others				3,600				3,546						(897,374	)				(1,161,441	)
Losses of assets				—				—						(4,795	)				(7,688	)

				3,600				3,546						(41,209,568	)				(35,400,596	)
Gross value added				3,600				3,546						3,076,361					3,033,157

Deductions
Depreciation and amortization		13;14		—				—						(392,030	)				(337,333	)
PIS and COFINS credits on depreciation		13;14		—				—						(8,079	)				(6,510	)

				—				—						(400,109	)				(343,843	)
Net value added by the Company				3,600				3,546						2,676,252					2,689,314

Value added received in transfer
Share of profit (loss) of subsidiaries, joint-ventures, and associates		12		270,159				602,920						(6,377	)				12,087
Rents and royalties		26		—				—						70,393					67,255
Financial income		30		119,137				55,416						304,599					301,299

				389,296				658,336						368,615					380,641
Total value added available for distribution				392,896				661,882						3,044,867					3,069,955

Distribution of value added
Labor and benefits				3,191		1		2,968			—			1,079,143			35		936,860			31
Taxes, fees, and contributions				26,521		7		(4,971	)		(1	)		1,056,730			35		888,348			29
Financial expenses and rents				47,740		12		75,781			12			595,474			20		653,437			21
Retained earnings				315,444		80		588,104			89			313,520			10		591,310			19

Value added distributed				392,896		100		661,882			100			3,044,867			100		3,069,955			100

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

1.	Operations

Ultrapar Participações S.A. (“Ultrapar” or “Company”) is a publicly-traded company headquartered at the Brigadeiro Luis Antônio Avenue, 1343 in the city of Săo Paulo – SP, Brazil.

The Company engages in the investment of its own capital in services, commercial, and industrial activities, through the subscription or acquisition of shares of other companies. Through its subsidiaries, it operates in the segments of liquefied petroleum gas—LPG distribution (“Ultragaz”), fuel distribution and related businesses (“Ipiranga”), production and marketing of chemicals (“Oxiteno”), and storage services for liquid bulk (“Ultracargo”) and retail distribution of pharmaceutical, hygiene, beauty, and skincare products, through Imifarma Produtos Farmacêuticos e Cosméticos S.A. (“Extrafarma”). For further information about segments, see Note 32.

2.	Presentation of Interim Financial Information and Summary of Significant Accounting Policies

The Company’s individual and consolidated interim financial information were prepared in accordance with the International Accounting Standard (“IAS”) 34 – Interim Financial Reporting issued by the International Accounting Standards Board (“IASB”) and in accordance with the pronouncement CPC 21 (R1) issued by the Accounting Pronouncements Committee (“CPC”) and approved by the Brazilian Securities and Exchange Commission (“CVM”).

All relevant specific information of the interim financial information, and only this information, is being presented and correspond to that used by the Company’s and its subsidiaries’ Management.

The presentation currency of the Company’s individual and consolidated interim financial information is the Brazilian Real (“R$”), which is the Company’s functional currency.

The Company and its subsidiaries applied the accounting policies described below in a consistent manner for all periods presented in the individual and consolidated interim financial information.

a.	*Recognition of Income*

Revenue of sales and services rendered is measured at the value of the consideration that the Company’s subsidiaries expect to be entitled to, net of sales returns, discounts, amortization of contractual assets with customers and other deductions, if applicable, being recognized as the entity fulfills its performance obligation. At Ipiranga, the revenue from sales of fuels and lubricants is recognized when the products are delivered to gas stations and to large consumers. At Ultragaz, revenue from sales of LPG is recognized when the products are delivered to customers at home, to independent dealers and to industrial and commercial customers. At Extrafarma, the revenue from sales of pharmaceuticals is recognized when the products are delivered to end user customers in own drugstores and when the products are delivered to independent resellers. At Oxiteno, the revenue from sales of chemical products is recognized when the products are delivered to industrial customers, depending of the freight mode of delivery. At Ultracargo, the revenue provided from storage services is recognized as services are performed. The breakdown of revenue from sales and services is shown in Note 26.

Amortization of contractual assets with customers for the exclusive rights in Ipiranga’s reseller service stations and the bonuses paid in performance obligation sales are recognized as a deduction of the sales revenue in the income statement according to the conditions established in the agreements which is reviewed as per the changes occurred in the agreements (see Notes 2.f and 11).

Deferred revenue from loyalty program is recognized in the income statement when the points are redeemed, on which occasion the costs incurred are also recognized in profit or loss. Deferred revenue of unredeemed points is also recognized in profit or loss when points expire. For more information, see Note 23—Loyalty program.

The franchising upfront fee received by Ipiranga is deferred and recognized in profit or loss on the straight-line accrual basis throughout the terms of the agreements with the franchisees. For more information, see Note 23—Franchising upfront fee.

Costs of products sold and services provided include goods (mainly fuels, lubricants, LPG, and pharmaceutical products), raw materials (chemicals and petrochemicals) and production, distribution, storage, and filling costs.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.	*Cash and Cash Equivalents*

Includes cash, banks deposits, and short-term, highly-liquid investments that are readily convertible into a known amount of cash and are subject to an insignificant risk of change in value. See Note 4 for further details on cash and cash equivalents of the Company and its subsidiaries.

c.	*Financial Assets*

The Company and its subsidiaries evaluated the classification and measurement of financial assets based on its business model of financial assets as follows:

•

Amortized cost: financial assets held in order to collect contractual cash flows, solely principal and interest. The interest earned and the foreign currency exchange variation are recognized in profit or loss, and balances are stated at acquisition cost plus the interest earned, using the effective interest rate method. Financial investments in guarantee of loans are classified as amortized cost.

•

Measured at fair value through other comprehensive income: financial assets that are acquired or originated for the purpose of collecting contractual cash flows or selling financial assets. The balances are stated at fair value, and the interest earned and the foreign currency exchange variation are recognized in profit or loss. Differences between fair value and initial amount of financial investments plus the interest earned are recognized in other comprehensive income in the “Valuation adjustments”. Accumulated gains and losses recognized in shareholders’ equity are reclassified to profit or loss at the time of their settlement. Substantially the financial investments in Bank Certificates of Deposit (“CDB”) and repurchase agreements are classified as measured at fair value through other comprehensive income.

•

Measured at fair value through profit or loss: financial assets not classified as amortized cost or measured at fair value through other comprehensive income. The balances are stated at fair value and both the interest earned and the exchange variations and changes in fair value are recognized in the income statement. Investment funds and derivatives are classified as measured at fair value through profit or loss.

The Company and its subsidiaries use financial instruments for hedging purposes, applying the concepts described below:

•

Hedge accounting—fair value hedge: financial instruments used to hedge exposure to changes in the fair value of an item, attributable to a particular risk, which can affect the entity’s profit or loss. In the initial designation of the fair value hedge, the relationship between the hedging instrument and the hedged item is documented, including the objectives of risk management, the strategy in conducting the transaction, and the methods to be used to evaluate its effectiveness. Once the fair value hedge has been qualified as effective, the hedge item is also measured at fair value. Gains and losses from hedge instruments and hedge items are recognized in profit or loss. The hedge accounting must be discontinued when the hedge becomes ineffective.

•

Hedge accounting—cash flow hedge: financial instruments used to hedge the exposure to variability in cash flows that is attributable to a risk associated with an asset or liability or highly probable transaction or firm commitment that may affect the income statements. The portion of the gain or loss on the hedging instrument that is determined to be effective relating to the effects of exchange rate effect, is recognized directly in equity in accumulated other comprehensive income as “Valuation adjustments” while the ineffective portion is recognized in profit or loss. Gains or losses on the hedging instrument relating to the effective portion of this hedge that had been recognized directly in accumulated other comprehensive income shall be recognized in profit or loss in the period in which the hedged item is recognized in profit or loss or as initial cost of non- financial assets, in the same line of the statement that the hedged item is recognized. The hedge accounting shall be discontinued when (i) the Company cancels the hedging relationship; (ii) the hedging instrument expires; and (iii) the hedging instrument no longer qualifies for hedge accounting. When hedge accounting is discontinued, gains and losses recognized in other comprehensive income in equity are reclassified to profit or loss in the period which the hedged item is recognized in profit or loss. If the transaction hedged is canceled or is not expected to occur, the cumulative gains and losses in other comprehensive income in equity shall be recognized immediately in profit or loss.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

•

Hedge accounting—hedge of net investments in foreign operation: financial instruments used to hedge exposure on net investments in foreign subsidiaries due to the fact that the local functional currency is different from the functional currency of the Company. The portion of the gain or loss on the hedging instrument that is determined to be effective, referring to the exchange rate effect, is recognized directly in equity in accumulated other comprehensive income as cumulative translation adjustments, while the ineffective portion and the operating costs are recognized in profit or loss. The gain or loss on the hedging instrument that has been recognized directly in accumulated other comprehensive income shall be recognized in income upon disposal of the foreign operation.

For further detail on financial instruments of the Company and its subsidiaries, see Note 33.

d.	*Trade Receivables*

Trade receivables are recognized at the amount invoiced of the counterparty that the Company subsidiaries are entitled. The estimated losses take into account, at the initial recognition of the contract, the expected losses for the next 12 months and for the useful life of the contract when the deterioration or improvement of the customers’ credit quality (see Notes 5 and 33—Customer Credit Risk), considering the customers’ characteristics in each business segment. The amount of the allowance for estimated losses on doubtful accounts is deemed by management to be sufficient to cover any probable loss on realization of trade receivables.

e.	*Inventories*

Inventories are stated at the lower of acquisition cost or net realizable value (see Note 6). The cost value of inventory is measured using the weighted average cost and includes the costs of acquisition and processing directly and indirectly related to the units produced based on the normal capacity of production. Estimates of net realizable value are based on the average selling prices at the end of the reporting period, net of applicable direct selling expenses. Subsequent events related to the fluctuation of prices and costs are also considered, if relevant. If net realizable values are below inventory costs, a provision corresponding to this difference is recognized. Provisions are also made for obsolescence of products, materials, or supplies that (i) do not meet its subsidiaries’ specifications, (ii) have exceeded their expiration date, or (iii) are considered slow-moving inventory. This classification is made by management with the support of its industrial and operations teams.

f.	*Contractual assets with customers – exclusive rights*

Exclusive rights disbursements as provided in Ipiranga’s agreements with reseller service stations and major consumers are recognized as contractual assets when paid and amortized according to the conditions established in the agreements (see Note 2.a and 11).

g.	*Investments*

Investments in subsidiaries are accounted for under the equity method of accounting in the individual interim financial information of the parent company (see Notes 3.b and 12). A subsidiary is an investee in which the investor is entitled to variable returns on investment and has the ability to interfere in its financial and operational activities. Usually the equity interest in a subsidiary is more than 50%.

Investments in associates and joint ventures are accounted for under the equity method of accounting in the individual and consolidated interim financial information (see Note 12). An associate is an investment, in which an investor has significant influence, that is, has the power to participate in the financial and operating decisions of the investee but does not exercise control. A joint venture is an investment in which the shareholders have the right to net assets on behalf of a joint control. Joint control is the agreement, which establish that decisions about the relevant activities of the investee require the consent from the parties that share control.

Other investments are stated at acquisition cost less provision for losses, unless the loss is considered temporary.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

h.	*Property, Plant, and Equipment*

Property, plant, and equipment is recognized at acquisition or construction cost, including financial charges incurred on property, plant, and equipment under construction, as well as maintenance costs resulting from scheduled plant outages and estimated costs to remove, to decommission, or to restore assets (see Notes 2.n and 20), less accumulated depreciation and, when applicable, less provision for losses (see Note 13).

Depreciation is calculated using the straight-line method, over the periods mentioned in Note 13, taking into account the estimated useful lives of the assets, which are reviewed annually.

Leasehold improvements are depreciated over the shorter of the lease contract term and useful life of the property.

i.	*Leases*

•

Finance Leases

Certain lease contracts transfer substantially all the risks and benefits associated with the ownership of an asset to the subsidiaries. These contracts are characterized as finance leases, and assets thereunder are capitalized at lease commencement at their fair value or, if lower, present value of the minimum lease payments under the contracts. The items recognized as assets are depreciated and amortized using the lower of the straight-line method over the lower of the useful lives applicable to each group of assets or the contract terms, as mentioned in Notes 13 and 14. Financial charges under the finance lease contracts are allocated to profit or loss over the lease contract term, based on the amortized cost and the effective interest rate method of the related lease obligation (see Note 15.i).

•

Operating Leases

There are lease transactions where the risks and benefits associated with the ownership of the asset are not transferred and where there is no purchase option, or the purchase option at the end of the contract is equivalent to the market value of the leased asset. Payments made under an operating lease contract are recognized as cost or expense in the income statement on a straight-line basis over the term of the lease contract (see Note 34.c).

j.	*Intangible Assets*

Intangible assets include assets acquired by the Company and its subsidiaries from third parties, according to the criteria below (see Note 14):

•

Goodwill is shown as intangible assets corresponding to the positive difference between the amount paid or payable to the seller and the fair value of the identified assets and liabilities assumed of the acquired entity. Goodwill is tested annually for impairment. Goodwill is allocated to the business segments, which represent the lowest level that goodwill is monitored by the Company for impairment testing purposes (see Note 14.i).

•

Other intangible assets acquired from third parties, such as software, technology, and commercial property rights, are measured at the total acquisition cost and amortized using straight-line method, over the periods mentioned in Note 14, taking into account their useful life, which is reviewed annually.

The Company and its subsidiaries have not recognized intangible assets that were generated internally. The Company and its subsidiaries have goodwill and brands acquired in business combinations, which are evaluated as intangible assets with indefinite useful life (see Note 14 items i and v).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

k.	*Other Assets*

Other assets are stated at the lower of cost and realizable value, including, if applicable, interest earned, monetary changes and changes in exchange rates incurred or less a provision for loss and, if applicable, adjustment to present value.

l.	*Financial Liabilities*

The Company and its subsidiaries’ financial liabilities include trade payables and other payables, loans, debentures, finance leases and derivative financial instruments. Financial liabilities are classified as “financial liabilities at fair value through profit or loss” or “financial liabilities at amortized cost”. The financial liabilities at fair value through profit or loss refer to derivative financial instruments, subscription warrants, and financial liabilities designated as hedged items in a fair value hedge relationship upon initial recognition (see Note 2.c – Fair Value Hedge). The financial liabilities at amortized cost are stated at the initial transaction amount plus related charges and net of amortization and transaction costs. The charges are recognized in profit or loss using the effective interest rate method.

Transaction costs incurred and directly attributable to the activities necessary for contracting loans or for issuing bonds, as well as premiums and discounts upon issuance of debentures and other debt, are allocated to the instrument and amortized to profit or loss over its term, using the effective interest rate method (see Note 15.j).

m.	*Income and Social Contribution Taxes on Income*

Current and deferred income tax (“IRPJ”) and social contribution on net income tax (“CSLL”) are calculated based on their current rates, considering the value of tax incentives. Taxes are recognized based on the rates of IRPJ and CSLL provided for by the laws enacted on the last day of the interim financial information. The current rates in Brazil are 25% for IRPJ and 9% for CSLL. For further details about recognition and realization of IRPJ and CSLL, see Note 9.

For purposes of disclosure, deferred tax assets were offset against the deferred tax liability, IRPJ and CSLL, in the same taxable entity and the same taxation authority.

n.	*Provision for Asset Retirement Obligation – Fuel Tanks*

The subsidiary Ipiranga has the legal obligation to remove the underground fuel tanks located at Ipiranga-branded service stations after a certain period. The estimated cost of the obligation to remove these fuel tanks is recognized as a liability when the tanks are installed. The estimated cost is recognized in property, plant, and equipment and depreciated over the respective useful lives of the tanks. The amounts recognized as a liability are monetarily restated using the National Consumer Price Index (“IPCA”) until the respective tank is removed (see Note 20). An increase in the estimated cost of the obligation to remove the tanks could result in negative impact in future results. The estimated removal cost is reviewed and updated annually or when there is significant change in its amount and change in the estimated costs are recognized in income statements when they become known.

o.	*Provisions for Tax, Civil, and Labor Risks*

A provision for tax, civil and labor risks is recognized for quantifiable risks, when the chance of loss is more-likely-than-not in the opinion of management and internal and external legal counsel, and the amounts are recognized based on the evaluation of the outcomes of the legal proceedings (see Note 21).

p.	*Post-Employment Benefits*

Post-employment benefits granted and to be granted to employees, retirees, and pensioners are based on an actuarial calculation prepared by an independent actuary and reviewed by management, using the projected unit credit method (see Note 19.b). The actuarial gains and losses are recognized in cumulative other comprehensive income in the “Valuation adjustments” and presented in the statement of shareholders’ equity.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

q.	*Other Liabilities*

Other liabilities are stated at known or measurable amounts plus, if applicable, related charges, monetary restatement, and changes in exchange rates incurred. When applicable, other liabilities are recognized at present value, based on interest rates that reflect the term, currency, and risk of each transaction.

r.	*Foreign Currency Transactions*

Foreign currency transactions carried out by the Company or its subsidiaries are remeasured into their functional currency at the exchange rate prevailing at the date of each transaction. Outstanding monetary assets and liabilities of the Company and its subsidiaries are translated using the exchange rate at the date of the reporting period. The effect of the difference between those exchange rates is recognized in profit or loss until the conclusion of each transaction.

s.	*Basis for Translation of Interim Financial Information of Foreign Subsidiaries*

Assets and liabilities of the foreign subsidiaries, denominated in currencies other than that of the Company (functional currency: Brazilian Real), which have administrative autonomy, are translated using the exchange rate at the end of the reporting period. Revenues and expenses are translated using the average exchange rate of each year and shareholders’ equity is translated at the historical exchange rate of each transaction affecting shareholders’ equity. Gains and losses resulting from changes in these foreign investments are directly recognized in shareholders’ equity in cumulative other comprehensive income in the “cumulative translation adjustments” and will be recognized in profit or loss if these investments are disposed of. The balance in cumulative other comprehensive income and presented in the shareholders’ equity as cumulative translation adjustments on June 30, 2018 was a gain of R$ 97,449 (gain of R$ 53,061 on December 31, 2017)—see Note 25.g—Cumulative Translation Adjustments.

The foreign subsidiaries with functional currency different from the Company and which have administrative autonomy are listed below:


Subsidiary	Functional currency	Location
Oxiteno México S.A. de C.V.	Mexican Peso	Mexico
Oxiteno Servicios Corporativos S.A. de C.V.	Mexican Peso	Mexico
Oxiteno Servicios Industriales de C.V.	Mexican Peso	Mexico
Oxiteno USA LLC	U.S. Dollar	United States
Oxiteno Uruguay S.A. (i)	U.S. Dollar	Uruguay
Oxiteno Andina, C.A. (ii)	Bolivar	Venezuela

(i)	The subsidiary Oxiteno Uruguay S.A. (“Oxiteno Uruguay”) determined its functional currency as the U.S. dollar (“US$”), as its inventory sales, purchases of raw material inputs, and financing activities are performed substantially in this currency.

(ii)

According the definition and general guidance of IAS 29, the characteristics of the economic environment of Venezuela indicate that this country is a hyperinflationary economy. As a result, the financial information of Oxiteno Andina, C.A. (“Oxiteno Andina”) was adjusted by the Venezuelan Consumer Price Index. On January 26, 2018, the Venezuelan Central Bank issued Foreign Exchange Regulation No. 39, altering the Venezuelan foreign exchange markets and regulating the DICOM—Tipo de Cambio Complementario Flotante de Mercado Supplemental (Floating Market Exchange) as the legally recognized type of exchange rate, being the Bolivar traded as of June 30, 2018 at the variable exchange rate of 115,000.00 VEF/US$ for sale and 114,712.50 VEF/US$ for purchase.

Assets and liabilities of the other foreign subsidiaries, which do not have administrative autonomy, are considered an extension of the activities of their parent company and are translated using the exchange rate at the end of the reporting period. Gains and losses resulting from changes in these foreign investments are directly recognized as financial income or loss. The loss recognized in income for the six-month period ended June 30, 2018 amounted to R$ 6,105 (R$ 3,455 gain for the six-month period ended June 30, 2017).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

t.	*Use of Estimates, Assumptions and Judgments*

The preparation of the interim financial information requires the use of estimates, assumptions, and judgments for the accounting of certain assets, liabilities, and income. Therefore, the Company and subsidiaries’ management use the best information available at the time of preparation of the interim financial information, as well as the experience of past and current events, also considering assumptions regarding future events. The interim financial information therefore include estimates, assumptions, and judgments related mainly to determining the fair value of financial instruments (Notes 2.c, 2.l, 4, 15 and 33), the determination of the estimated losses on doubtful accounts (Notes 2.d, 5 and 33), the determination of provisions for losses of inventories (Notes 2.e and 6), the determination of deferred IRPJ and CSLL amounts (Notes 2.m and 9), the determination of control in subsidiaries (Notes 2.g, 2.s, 3 and 12.a), the determination of joint control in joint venture (Notes 2.g, 12.a and 12.b), the determination of significant influence in associates (Notes 2.g and 12.c), the determination of exchange rate used to translation of Oxiteno Andina’ information (Note 2.s), the useful lives of property, plant, and equipment (Notes 2.h and 13), the useful lives of intangible assets, and the determination of the recoverable amount of goodwill (Notes 2.j and 14), provisions for assets retirement obligations (Notes 2.n and 20), provisions for tax, civil, and labor risks (Notes 2.o and 21), estimates for the preparation of actuarial reports (Notes 2.p and 19.b) and the determination of fair value of subscription warrants – indemnification (Notes 24 and 33). The actual result of the transactions and information may differ from their estimates.

u.	*Impairment of Assets*

The Company and its subsidiaries review, every report period, the existence of any indication that an asset may be impaired and annually test intangible assets with undefined useful life. If there is an indication, the Company and its subsidiaries estimate the recoverable amount of the asset. Assets that cannot be evaluated individually are grouped in the smallest group of assets that generate cash flow from continuous use and that are largely independent of cash flows of other assets (cash generating units “CGU”). The recoverable amount of assets or CGUs corresponds to the greater of their fair value net of applicable direct selling costs and their value in use.

The fair value less costs of disposal is determined by the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date, net of costs of removing the asset, and direct incremental costs to bring an asset into condition for its sale, legal costs, and taxes.

To assess the value in use, the Company and its subsidiaries consider the projections of future cash flows, trends, and outlooks, as well as the effects of obsolescence, demand, competition, and other economic factors. Such cash flows are discounted to their present values using the discount rate before tax that reflects market conditions for the period of impairment testing and the specific risks of the asset or CGU being evaluated. In cases where the expected discounted future cash flows are less than their carrying amount, an impairment loss is recognized for the amount by which the carrying value exceeds the fair value of these assets. Losses for impairment of assets are recognized in profit or loss. In case goodwill has been allocated to a CGU, the recognized losses are first allocated to reduce the corresponding goodwill. If the goodwill is not enough to absorb such losses, the surplus is allocated to the assets on a pro-rata basis. An impairment of goodwill cannot be reversed. For other assets, impairment losses may be reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if the impairment had not been recognized.

No impairment was recognized in the present period (see Note 14.i).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

v.	*Business Combination*

A business combination is accounted applying the acquisition method. The cost of the acquisition is measured based on the consideration transferred and to be transferred, measured at fair value at the acquisition date. In a business combination, the assets acquired and liabilities assumed are measured in order to classify and allocate them accordingly to the contractual terms, economic circumstances and relevant conditions on the acquisition date. The non-controlling interest in the acquired is measured based on its interest in identifiable net assets acquired. Goodwill is measured as the excess of the consideration transferred and to be transferred over the fair value of net assets acquired (identifiable assets and liabilities assumed, net). After the initial recognition, goodwill is measured at cost less any accumulated impairment losses. For impairment testing purposes, goodwill is allocated to the Company’s operating segments. When the cost of the acquisition is lower than the fair value of net assets acquired, a gain is recognized directly in the income statement. Costs related to the acquisition are recorded in the income statement when incurred.

w.	*Statements of Value Added*

As required by Brazilian Corporate Law, the Company and its subsidiaries prepare the individual and consolidated statements of value added (“DVA”) according to CPC 09 – Statement of Value Added, as an integral part of the interim financial information as applicable to publicly-traded companies, and as supplemental information for the International Financial Reporting Standards (“IFRS”), which does not require the presentation of DVA.

x.	*Statements of Cash Flows Indirect Method*

The Company and its subsidiaries prepared its individual and consolidated statements of cash flows in accordance with IAS 7 (CPC 03)—Cash Flow Statement. The Company and its subsidiaries present the interest paid on loans and debentures in financing activities. The Company and its subsidiaries present financial investments on a net basis of income and redemptions in the investment activities.

y.	*Adoption of the Pronouncements Issued by CPC and IASB*

The following standards, amendments, and interpretations to IFRS were issued by the IASB, which are effective as of January 1, 2018:


	Equivalent CPC		Effective date
• IFRS 9 – Financial instrument classification and measurement: includes new requirements for the classification and measurement of financial assets and liabilities, derecognition requirements, new impairment methodology for financial instruments, and new hedge accounting guidance.		48		2018
• IFRS 15—Revenue from contracts with customers: establish the principles of nature, amount, timing and uncertainty of revenue and cash flow arising from a contract with a customer.		47		2018

The Company and its subsidiaries disclosed the information to the impacts on the adoption of IFRS 9 (CPC 48) and 15 (CPC 47), in accordance with the new accounting practices introduced by the IASB and immaterial reclassifications and adjustments to the better presentation of the interim financial information: i) the sales revenue previously recognized at the issuance of the invoice, was adjusted to the time of the delivery of the products and ii) segregation of sales and purchase taxes between the sales revenue and the cost of products.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

(1) IFRS 9 adoption (CPC 48)—Financial instruments

Classification and measurement of financial instruments:

The Company and its subsidiaries evaluated the classification and measurement of financial instruments and, based on its business model, concluded that the target is achieved, receiving contractual cash flows and selling financial assets (hold for collect and sell). Accordingly, most part of the financial investments are classified as measured at fair value through other comprehensive income, except for funds that are classified as measured at fair value through profit or loss and financial investments given as collateral for loans that are classified as amortized cost (see Note 2.c).


	12/31/2017
	Classification as previously reported according to IAS 39 / CPC 38			New classification according to IFRS 9 / CPC 48
	Category	Carrying value		Measured at fair value through profit or loss		Measured at fair value through other comprehensive income		Measured at amortized cost
Financial assets:
Cash and cash equivalents
Cash and bank deposits	Loans and receivables		147,926		—		—		147,926
Financial investments in local currency	Measured at fair value through profit or loss		4,821,605		—		4,821,605		—
Financial investments in foreign currency	Measured at fair value through profit or loss		32,473		32,473		—		—
Financial investments:
Fixed-income securities and funds in local currency	Available for sale		68,742		—		2,720		66,022
Fixed-income securities and funds in local currency	Measured at fair value through profit or loss		1,076,849		1,076,849		—		—
Fixed-income securities and funds in local currency	Held to maturity		7,449		—		—		7,449
Fixed-income securities and funds in foreign currency	Available for sale		129,131		—		129,131		—
Currency and interest rate hedging instruments	Measured at fair value through profit or loss		85,753		85,753		—		—

Total			6,369,928		1,195,075		4,953,456		221,397

Estimated losses on doubtful accounts

The Company and its subsidiaries assessed the estimated credit losses on doubtful accounts on trade receivables, taking into account, at the initial recognition of the contract, the expected losses for the next 12 months and for the useful life of the contract when the deterioration or improvement of customers’ credit quality (see Note 2.d).

Derivative financial instruments

The Company and its subsidiaries have not identified impacts arising from this change keeping the permanence of the application of IAS 39.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

(2) IFRS 15 adoption (CPC 47)—Revenue recognition from contracts with customers

The Company and its subsidiaries evaluated all the stages for the recognition of their revenues from contracts with customers and based on their diagnosis did not identify material measurement impacts resulting from the adoption of this standard (see Note 2.a).

In relation to the presentation in the income statement, the Company and its subsidiaries evaluated that certain expenses, allocated as selling and marketing until December 31, 2017, should be better presented as a reduction of revenue, substantially in relation to the amortization expenses of exclusive contracts to operate Ipiranga service station.

The Company and its subsidiaries adopted retrospectively the impacts of the IFRS 9 and 15.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The table below summarizes the effects of the IFRS 9 (CPC 48) and 15 (CPC 47) adoption, immaterial reclassifications and adjustments:

Balance sheets as of December 31, 2017


Assets	As previously reported		IFRS 9 adoption (1)			IFRS 15 adoption (2)			Reclassification and adjustments			After adoption IFRS 9 and 15
Current assets
Cash and cash equivalents		5,002,004		—			—			—			5,002,004
Financial investments and hedging instruments		1,283,498		—			—			—			1,283,498
Trade receivables and reseller financing, net		4,337,118		(157,198	)		—			(32,026	)		4,147,894
Inventories, net		3,491,879		—			—			21,698			3,513,577
Recoverable taxes, net		881,584		—			—			—			881,584
Dividends receivable		11,137		—			—			—			11,137
Other receivables		44,025		—			—			—			44,025
Prepaid expenses, net		150,046		—			—			—			150,046
Contractual assets with customers – exclusive rights, net		—		—			456,213			—			456,213

Total current assets		15,201,291		(157,198	)		456,213			(10,328	)		15,489,978
Non-current assets
Financial investments and hedging instruments		84,426		—			—			—			84,426
Trade receivables and reseller financing, net		329,991		—			—			—			329,991
Related parties		490		—			—			—			490
Deferred income and social contribution taxes		545,611		53,447			12,150			2,853			614,061
Recoverable taxes, net		313,242		—			—			—			313,242
Escrow deposits		822,660		—			—			—			822,660
Indemnity asset – business combination		202,352		—			—			—			202,352
Other receivables		7,918		—			—			—			7,918
Prepaid expenses, net		346,886		—			—			—			346,886
Contractual assets with customers – exclusive rights, net		—		—			1,046,147			—			1,046,147

Total long term assets		2,653,576		53,447			1,058,297			2,853			3,768,173
Investments
In joint-ventures		122,061		—			—			—			122,061
In associates		25,341		—			—			—			25,341
Other		2,792		—			—			—			2,792
Property, plant, and equipment, net		6,607,788		—			—			26,740			6,634,528
Intangible assets, net		3,727,473		—			(1,538,095	)		(26,740	)		2,162,638

		10,485,455		—			(1,538,095	)		—			8,947,360
Total non-current assets		13,139,031		53,447			(479,798	)		2,853			12,715,533

Total assets		28,340,322		(103,751	)		(23,585	)		(7,475	)		28,205,511

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Balance sheets as of December 31, 2017


Liabilities	As previously reported			IFRS 9 adoption (1)			IFRS 15 adoption (2)			Reclassification and adjustments			After adoption IFRS 9 and 15
Current liabilities
Loans and hedging instruments		1,819,766			—			—			—			1,819,766
Debentures		1,681,199			—			—			—			1,681,199
Finance leases		2,710			—			—			—			2,710
Trade payables		2,155,498			—			—			—			2,155,498
Salaries and related charges		388,118			—			—			—			388,118
Taxes payable		225,829			—			—			(4,300	)		221,529
Dividends payable		338,845			—			—			—			338,845
Income and social contribution taxes payable		86,836			—			—			—			86,836
Post-employment benefits		30,059			—			—			—			30,059
Provision for asset retirement obligation		4,799			—			—			—			4,799
Provision for tax, civil, and labor risks		64,550			—			—			—			64,550
Trade payables – customers and third parties’ indemnification		72,216			—			—			—			72,216
Other payables		125,150			—			—			—			125,150
Deferred revenue		18,413			—			—			—			18,413

Total current liabilities		7,013,988			—			—			(4,300	)		7,009,688
Non-current liabilities
Loans and hedging instruments		6,113,545			—			—			—			6,113,545
Debentures		3,927,569			—			—			—			3,927,569
Finance leases		45,805			—			—			—			45,805
Related parties		4,185			—			—			—			4,185
Deferred income and social contribution taxes		38,524			—			—			—			38,524
Post-employment benefits		207,464			—			—			—			207,464
Provision for asset retirement obligation		59,975			—			—			—			59,975
Provision for tax, civil, and labor risks		861,246			—			—			—			861,246
Deferred revenue		12,896			—			—			—			12,896
Subscription warrants – indemnification		171,459			—			—			—			171,459
Other payables		162,834			—			—			—			162,834

Total non-current liabilities		11,605,502			—			—			—			11,605,502
Shareholders’ equity
Share capital		5,171,752			—			—			—			5,171,752
Equity instrument granted		536			—			—			—			536
Capital reserve		549,778			—			—			—			549,778
Treasury shares		(482,260	)		—			—			—			(482,260	)
Revaluation reserve on subsidiaries		4,930			—			—			—			4,930
Profit reserves		3,760,079			(103,468	)		(23,585	)		(3,175	)		3,629,851
Valuation adjustments		159,643			—			—			—			159,643
Cumulative translation adjustments		53,061			—			—			—			53,061
Additional dividends to the minimum mandatory dividends		163,742			—			—			—			163,742

Shareholders’ equity attributable to:
Shareholders of the Company		9,381,261			(103,468	)		(23,585	)		(3,175	)		9,251,033
Non-controlling interests in subsidiaries		339,571			(283	)		—			—			339,288

Total shareholders’ equity		9,720,832			(103,751	)		(23,585	)		(3,175	)		9,590,321

Total liabilities and shareholders’ equity		28,340,322			(103,751	)		(23,585	)		(7,475	)		28,205,511

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Income Statements for the six-month period ended June 30, 2017


	As previously reported			IFRS 9 adoption (1)			IFRS 15 adoption (2)			Reclassification and adjustments			After adoption IFRS 9 and 15
Net revenue from sales and services		37,900,928			—			(252,532	)		(107,626	)		37,540,770
Cost of products and services sold		(34,631,410	)		—			—			107,626			(34,523,784	)

Gross profit		3,269,518			—			(252,532	)		—			3,016,986
Operating income (expenses)
Selling and marketing		(1,424,447	)		(39,754	)		251,883			—			(1,212,318	)
General and administrative		(751,820	)		—			—			—			(751,820	)
Gain (loss) on disposal of property, plant and equipment and intangibles		(150	)		—			—			—			(150	)
Other operating income, net		62,911			—			—			—			62,911

Operating income before financial income (expenses) and share of profit of joint ventures and associates		1,156,012			(39,754	)		(649	)		—			1,115,609
Financial income		301,299			—			—			—			301,299
Financial expenses		(535,319	)		—			—			—			(535,319	)

Financial result, net		(234,020	)		—			—			—			(234,020	)
Share of profit of joint ventures and associates		12,087			—			—			—			12,087

Income before income and social contribution taxes		934,079			(39,754	)		(649	)		—			893,676

Income and social contribution taxes
Current		(308,416	)		—			—			—			(308,416	)
Deferred		(8,149	)		13,978			221			—			6,050

		(316,565	)		13,978			221			—			(302,366	)
Net income for the period		617,514			(25,776	)		(428	)		—			591,310

Net income for the period attributable to:
Shareholders of the Company		614,270			(25,776	)		(390	)		—			588,104
Non-controlling interests in subsidiaries		3,244			—			(38	)		—			3,206
Earnings per share (based on weighted average number of shares outstanding) – R$
Basic		1.1338												1.0855
Diluted		1.1255												1.0777

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Statements of Cash Flows for the six-month period ended June 30, 2017


	As previously reported			IFRS 9 adoption (1)			IFRS 15 adoption (2)			Reclassification and adjustments			After adoption IFRS 9 and 15
Cash flows from operating activities
Net income for the period		617,514			(25,776	)		(428	)		—			591,310
Adjustments to reconcile net income to cash provided by operating activities
Share of loss (profit) of joint ventures and associates		(12,087	)		—			—			—			(12,087	)
Amortization of contractual assets with customers – exclusive rights		—			—			247,577			—			247,577
Depreciation and amortization		589,216			—			(251,883	)		—			337,333
PIS and COFINS credits on depreciation		6,510			—			—			—			6,510
Asset retirement obligation		(1,329	)		—			—			1,329			—
Interest, monetary, and foreign exchange rate variations		397,423			—			—			—			397,423
Deferred income and social contribution taxes		8,149			(13,978	)		(221	)		—			(6,050	)
(Gain) loss on disposal of property, plant and equipment and intangibles		150			—			—			—			150
Estimated credit losses on doubtful accounts		—			—			—			74,983			74,983
Provision for losses in inventories		—			—			—			(104	)		(104	)
Provision for post-employment benefits		—			—			—			6,116			6,116
Other provisions and adjustments		145			—			—			—			145

		1,605,691			(39,754	)		(4,955	)		82,324			1,643,306
(Increase) decrease in current assets
Trade receivables and reseller financing		126,254			39,754			(4,750	)		(74,983	)		86,275
Inventories		177,473			—			—			104			177,577
Contractual assets with customers – exclusive rights		—			—			(6,702	)		—			(6,702	)
Other current asset items		272,242			—			—			—			272,242
Increase (decrease) in current liabilities
Insurance and other payables		34,632			—			—			(1,329	)		33,303
Other current liabilities items		(323,938	)		—			—			—			(323,938	)
(Increase) decrease in non-current assets
Contractual assets with customers – exclusive rights		—			—			11,452			—			11,452
Other non-current asset items		(194,597	)		—			—			—			(194,597	)
Increase (decrease) in non-current liabilities
Post-employment benefits		7,527			—			—			(6,116	)		1,411
Other non-current liabilities items		(81,452	)		—			—			—			(81,452	)
Payments of contractual assets with customers – exclusive rights		—			—			(282,801	)		—			(282,801	)
Income and social contribution taxes paid		(366,074	)		—			—			—			(366,074	)

Net cash provided by operating activities		1,257,758			—			(287,756	)		—			970,002

Cash flows from investing activities
Acquisition of intangible assets		(379,487	)		—			287,756			—			(91,731	)
Other investing activities items		(605,062	)		—			—			—			(605,062	)

Net cash used in investing activities		(984,549	)		—			287,756			—			(696,793	)

Net cash provided by financing activities		8,112			—			—			—			8,112

Effect of exchange rate changes on cash and cash equivalents in foreign currency		33,879			—			—			—			33,879

Decrease in cash and cash equivalents		315,200			—			—			—			315,200

Cash and cash equivalents at the beginning of the period		4,274,158			—			—			—			4,274,158
Cash and cash equivalents at the end of the period		4,589,358			—			—			—			4,589,358

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The following standards, amendments, and interpretations to IFRS were issued by the IASB are not effective as of June 30, 2018:


	Equivalent CPC			Effective date
• IFRS 16—Lease: requires lessees’ record, in the financial statements, a liability reflecting future payments of a lease and the right to use an asset for the lease contracts, except for certain short-term leases and low asset value contracts. The criteria for recognition and measurement of leases in the financial statements of lessors are substantially maintained.		06	(R2)		2019

The Company and its subsidiaries are quantifying the potential effects of this pronouncement, and it is expected to have a relevant impact on the recognition of the right of use and debt related to lease contracts of the land and building of service stations, drugstores and stores due to the number of operating lease contracts of the subsidiaries (see Note 34.c).

z.	*Authorization for Issuance of the Interim Financial Information*

These interim financial information were authorized for issue by the Board of Directors on August 1^st, 2018.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

3.	Principles of Consolidation, Investments in Subsidiaries and Acquisition

Principles of Consolidation

In the preparation of the consolidated interim financial information the investments of one company in another, balances of asset and liability accounts, revenues transactions, costs and expenses were eliminated, as well as the effects of transactions conducted between the companies. Non-controlling interests in subsidiaries are presented within consolidated shareholders’ equity and net income.

Consolidation of a subsidiary begins when the parent company obtains direct or indirect control over a company and ceases when the parent company loses control of a company. Income and expenses of a subsidiary acquired are included in the consolidated income statement and other comprehensive income from the date the parent company gains the control. Income and expenses of a subsidiary, in which the parent company loses control, are included in the consolidated income statement and other comprehensive income until the date the parent company loses control.

When necessary, adjustments are made to the interim financial information of subsidiaries to bring their accounting policies into line with the Company’s accounting policies.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Investments in Subsidiaries

The consolidated interim financial information include the following direct and indirect subsidiaries:


			% interest in the share
			06/30/2018				12/31/2017
			Control				Control
	Location	Segment	Direct control		Indirect control		Direct control		Indirect control
Ipiranga Produtos de Petróleo S.A.	Brazil	Ipiranga		100		—		100		—
am/pm Comestíveis Ltda.	Brazil	Ipiranga		—		100		—		100
Centro de Conveniências Millennium Ltda.	Brazil	Ipiranga		—		100		—		100
Icorban—Correspondente Bancário Ltda.	Brazil	Ipiranga		—		100		—		100
Ipiranga Trading Limited	Virgin Islands	Ipiranga		—		100		—		100
Tropical Transportes Ipiranga Ltda.	Brazil	Ipiranga		—		100		—		100
Ipiranga Imobiliária Ltda.	Brazil	Ipiranga		—		100		—		100
Ipiranga Logística Ltda.	Brazil	Ipiranga		—		100		—		100
Oil Trading Importadora e Exportadora Ltda.	Brazil	Ipiranga		—		100		—		100
Chevron Brasil Lubrificantes S.A. (see Note 3.c)	Brazil	Ipiranga		—		56		—		56
Ipiranga Lubrificantes S.A. (see Note 3.c)	Brazil	Ipiranga		—		100		—		100
Integra Frotas Ltda.	Brazil	Ipiranga		—		100		—		100
Companhia Ultragaz S.A.	Brazil	Ultragaz		—		99		—		99
Ultragaz Comercial Ltda.	Brazil	Ultragaz		—		100		—		100
Bahiana Distribuidora de Gás Ltda.	Brazil	Ultragaz		—		100		—		100
Utingás Armazenadora S.A.	Brazil	Ultragaz		—		57		—		57
LPG International Inc.	Cayman Islands	Ultragaz		—		100		—		100
Imaven Imóveis Ltda.	Brazil	Others		—		100		—		100
Imifarma Produtos Farmacêuticos e Cosméticos S.A.	Brazil	Extrafarma		—		100		—		100
Oxiteno S.A. Indústria e Comércio	Brazil	Oxiteno		100		—		100		—
Oxiteno Nordeste S.A. Indústria e Comércio	Brazil	Oxiteno		—		99		—		99
Oxiteno Argentina Sociedad de Responsabilidad Ltda.	Argentina	Oxiteno		—		100		—		100
Oleoquímica Indústria e Comércio de Produtos Químicos Ltda.	Brazil	Oxiteno		—		100		—		100
Oxiteno Uruguay S.A.	Uruguay	Oxiteno		—		100		—		100
Oxiteno México S.A. de C.V.	Mexico	Oxiteno		—		100		—		100
Oxiteno Servicios Corporativos S.A. de C.V.	Mexico	Oxiteno		—		100		—		100
Oxiteno Servicios Industriales S.A. de C.V.	Mexico	Oxiteno		—		100		—		100
Oxiteno USA LLC	United States	Oxiteno		—		100		—		100
Global Petroleum Products Trading Corp.	Virgin Islands	Oxiteno		—		100		—		100
Oxiteno Andina, C.A.	Venezuela	Oxiteno		—		100		—		100
Oxiteno Europe SPRL	Belgium	Oxiteno		—		100		—		100
Oxiteno Colombia S.A.S	Colombia	Oxiteno		—		100		—		100
Oxiteno Shanghai LTD.	China	Oxiteno		—		100		—		100
Empresa Carioca de Produtos Químicos S.A.	Brazil	Oxiteno		—		100		—		100
Ultracargo—Operações Logísticas e Participações Ltda.	Brazil	Ultracargo		100		—		100		—
Terminal Químico de Aratu S.A. – Tequimar	Brazil	Ultracargo		—		99		—		99
TEAS – Terminal Exportador de Álcool de Santos Ltda. (see Note 3.d)	Brazil	Ultracargo		—		100		—		—
Ultrapar International S.A.	Luxembourg	Others		100		—		100		—
SERMA—Ass. dos usuários equip. proc. de dados	Brazil	Others		—		100		—		100

The percentages in the table above are rounded.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Association with Chevron Brasil Lubrificantes S.A.

On August 4, 2016, the Company through its subsidiary Ipiranga Produtos de Petróleo S.A. (“IPP”) entered into an association agreement with Chevron Brasil Lubrificantes Ltda. (“Chevron”) to create a new company in the lubricants market. The association is formed by Ipiranga and Chevron’s lubricants operations in Brazil. On February 2017, this transaction was approved without restrictions through an opinion issued by the General Superintendence (“SG”) of the Brazilian Antitrust Authority (“CADE”) and published in the Brazilian Federal Official Gazette. On December 1, 2017, the association was concluded, through the contribution of the subsidiary Ipiranga Lubrificantes S.A. (“IpiLubs”) to Chevron Brasil Lubrificantes S.A. (“CBLSA”) and consequently IPP obtained direct control of CBLSA. IPP and Chevron hold 56% and 44%, respectively, of the CBLSA.

The Company is measuring the open balance, fair value of assets and liabilities, and, consequently, the goodwill of their transaction. The purchase price allocation will be concluded in 2018. During the process of identification of assets and liabilities, intangible assets, which are not recognized in the acquired entity’s books, will also be taken into account. The Company, supported by a third party company specialized in valuations, estimated the temporary amount for the purchase price allocation and calculated the temporary goodwill in the amount of R$ 123,673. The temporary goodwill is based on the synergy between the lubricant operations of CBLSA and IpiLubs.

The table below summarizes the temporary assets acquired and liabilities assumed as of the acquisition date (December 1, 2017), subject to the customary final adjustments of purchase price allocation and calculation of goodwill:


Current assets		Current liabilities
Cash and cash equivalents	73,316	Trade payables	33,453
Trade receivables	157,016	Salaries and related charges	18,251
Inventories	112,998	Taxes payable	20,089
Recoverable taxes	5,595	Other payables	28,743
Other receivables	15,497

	364,422		100,536
Non-current assets		Non-current liabilities
Related parties	7,077	Provision for tax, civil, and labor risks	202,352
Indemnity asset	202,352	Deferred income and social contribution taxes	3,300
Escrow deposits	4,095	Post-employment benefits	44,478
Other receivables	5,257
Property, plant, and equipment	172,526
Intangible assets	9,944

	401,251		250,130

Total assets acquired	765,673	Total liabilities assumed	350,666

Temporary goodwill	123,673	Participation of non-controlling interests	182,603

Total assets acquired and temporary goodwill	889,346	Temporary consideration transferred	356,077

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


The calculation of the temporary goodwill is shown below:
Temporary consideration transferred	356,077
Total assets acquired	(765,673	)
Total liabilities assumed	350,666
Non-controlling interest	182,603

Temporary goodwill (see Note 14.i)	123,673

TEAS – Terminal Exportador de Álcool de Santos Ltda. Acquisition

On January 30, 2018, the Company through its subsidiary Terminal Químico de Aratu S.A. – Tequimar (“Tequimar”) entered into a sale and purchase agreement for the acquisition of 100% of the quotas of TEAS Terminal Exportador de Álcool de Santos Ltda. (“TEAS”), owned by Raízen Energia S.A. and Raízen Araraquara Açúcar e Álcool Ltda., which had already been operated by the subsidiary Tequimar in the Port of Santos. The purchase price of the acquisition was R$103,373. On February 14, 2018, this transaction was approved without restrictions through an opinion issued by the SG of CADE. On March 2, 2018, CADE issued a certificate, attesting to the approval of the transaction. On March 29, 2018, the acquisition was concluded through the closing of the operation.

The table below summarizes the temporary assets acquired and liabilities assumed as of the acquisition date, subject to the customary final adjustments of purchase price allocation and calculation of goodwill:


Current assets		Current liabilities
Cash and cash equivalents	3,662	Trade payables	14

Recoverable taxes	3,830		14
Other receivables	4,861

	12,353
Non-current assets
Deferred income and social contribution taxes	1,054	Contingent consideration	2,880
Escrow deposits	72
Property, plant, and equipment	86,535

	87,661

Total assets acquired	100,014	Total liabilities assumed	2,894

Temporary goodwill	6,253

Total assets acquired and temporary goodwill	106,267	Consideration transferred	103,373

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


The calculation of the temporary goodwill is shown below:
Consideration transferred	103,373
Total assets acquired	(100,014	)
Total liabilities assumed	2,894

Temporary goodwill (see Note 14.i)	6,253

For further details of property, plant, and equipment assets acquired, see Note 13.

Unrealized Acquisition

On November 17, 2016, the Company through its subsidiary Companhia Ultragaz S.A. (“Cia Ultragaz”), entered into a sale and purchase agreement for the acquisition of 100% of the capital stock of Liquigás Distribuidora S.A (“Liquigás”). The total transaction amount is R$ 2,665 million and will be adjusted by the Interbank Certificate of Deposit (“CDI”), between the execution date and transaction closing date. The amount will still be subject to adjustments related to the variations in Liquigás’ working capital and net debt between December 31, 2015 and the closing date of the transaction. On January 23, 2017, the Extraordinary General Shareholders’ Meeting (“EGM”) of Ultrapar approved the transaction. The closing of the acquisition were subject to certain usual conditions precedent in transactions of similar nature, mainly the approval by CADE. On February 28, 2018, the Court of Appeals of CADE voted the transaction and despite all the efforts endeavored by the applicants throughout the analysis of the process and the negotiations conducted with the Court of Appeals decided to reject the transaction with the majority of votes. Due to non-compliance of one of the precedent conditions to the consummation of the transaction, Cia. Ultragaz paid a fine of R$ 286,160 in favor of Petróleo Brasileiro S.A. – Petrobras (“Petrobras”) on March 9, 2018 (see Note 29).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

4.	Cash and Cash Equivalents and Financial Investments

Cash equivalents and financial investments, excluding cash and bank deposits, are substantially represented by investments: (i) in Brazil, in certificates of deposit of first-rate financial institutions linked to the CDI, in repurchase agreement and in short term investments funds, whose portfolio comprised of Brazilian Federal Government bonds and in certificates of deposit of first-rate financial institutions; (ii) outside Brazil, in certificates of deposit of first-rate financial institutions and in short term investments funds, whose portfolio comprised of Federal Government bonds; and (iii) in currency and interest rate hedging instruments.

The financial assets were classified in Note 33, based on business model of financial assets of the Company and its subsidiaries.

The balance of cash, cash equivalents and financial investments (consolidated) amounted to R$ 6,119,267 as of June 30, 2018 (R$ 6,369,928 as of December 31, 2017) and are distributed as follows:

•

Cash and Cash Equivalents

Cash and cash equivalents are considered: (i) cash and bank deposits, and (ii) highly-liquid short-term investments that are readily convertible into a known amount of cash and are subject to an insignificant risk of change in value.


	Parent				Consolidated
	06/30/2018		12/31/2017		06/30/2018		12/31/2017
Cash and bank deposits
In local currency		304		143		84,457		73,128
In foreign currency		—		—		112,543		74,798
Financial investments considered cash equivalents
In local currency
Fixed-income securities		474,199		93,031		3,705,463		4,821,605
In foreign currency
Fixed-income securities		—		—		37,900		32,473

Total cash and cash equivalents		474,503		93,174		3,940,363		5,002,004

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

•

Financial Investments

The financial investments of the Company and its subsidiaries, which are not classified as cash and cash equivalents, are distributed as follows:


	Parent				Consolidated
	06/30/2018		12/31/2017		06/30/2018		12/31/2017
Financial investments
In local currency
Fixed-income securities and funds		579,491		21,657		1,740,824		1,153,040
In foreign currency
Fixed-income securities and funds		—		—		231,682		129,131
Currency and interest rate hedging instruments (a)		—		—		206,398		85,753

Total financial investments		579,491		21,657		2,178,904		1,367,924

Current		579,491		21,657		2,029,689		1,283,498
Non-current		—		—		149,215		84,426

(a)	Accumulated gains, net of income tax (see Note 33).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

5.	Trade Receivables and Reseller Financing (Consolidated)

The composition of trade receivables and reseller financing is as follows:


	06/30/2018			12/31/2017
				Restated
Domestic customers		4,230,281			4,025,726
Reseller financing – Ipiranga (i)		746,052			675,236
Foreign customers		281,885			229,701
(-) Estimated losses on doubtful accounts		(503,821	)		(452,778	)

Total		4,754,397			4,477,885

Current		4,403,577			4,147,894
Non-current		350,820			329,991

(i)	Reseller financing is provided for renovation and upgrading of service stations, purchase of products, and development of the automotive fuels and lubricants distribution market.

The breakdown of trade receivables, gross of estimated losses on doubtful accounts, is as follows:


					Past due
	Total		Current		less than 30 days		31-60 days		61-90 days		91-180 days		more than 180 days
06/30/2018		5,258,218		4,323,935		154,989		65,550		52,947		100,570		560,227
12/31/2017		4,930,663		4,070,523		200,939		46,491		48,197		87,812		476,701

Movements in the allowance for estimated losses on doubtful accounts are as follows:


Balance as of December 31, 2017	295,580
IFRS 9 adoption	157,198

Balance as of December 31, 2017—Restated	452,778
Additions	65,719
Write-offs	(14,676	)

Balance as of June 30, 2018	503,821

For further information about the allowance for estimated losses on doubtful accounts, see Note 33 – Customer credit risk.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

6.	Inventories (Consolidated)

The composition of inventories is as follows:


	06/30/2018							12/31/2017
								Restated
	Cost		Provision for losses			Net balance		Cost		Provision for losses			Net balance
Fuels, lubricants and greases		1,343,942		(3,651	)		1,340,291		1,626,449		(3,074	)		1,623,375
Finished goods		513,054		(22,379	)		490,675		500,223		(18,495	)		481,728
Work in process		1,590		—			1,590		1,637		—			1,637
Raw materials		420,230		(2,091	)		418,139		492,029		(1,835	)		490,194
Liquefied petroleum gas (LPG)		90,904		(5,761	)		85,143		102,748		(5,761	)		96,987
Consumable materials and other items for resale		146,869		(4,060	)		142,809		160,024		(5,380	)		154,644
Pharmaceutical, hygiene, and beauty products		467,582		(4,083	)		463,499		417,726		(2,447	)		415,279
Purchase for future delivery ⁽¹⁾		107,011		—			107,011		222,808		—			222,808
Properties for resale		27,489		(107	)		27,382		27,032		(107	)		26,925

		3,118,671		(42,132	)		3,076,539		3,550,676		(37,099	)		3,513,577

⁽¹⁾	Refers substantially to ethanol, biodiesel and advance of fuels.

Movements in the provision for losses are as follows:


Balance as of December 31, 2017			37,099
Additions to net realizable value adjustment			239
Additions of obsolescence and other losses			4,794

Balance as of June 30, 2018			42,132

The breakdown of provisions for losses related to inventories is shown in the table below:


	06/30/2018		12/31/2017
Net realizable value adjustment		20,056		19,817
Obsolescence and other losses		22,076		17,282

Total		42,132		37,099

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

7.	Recoverable Taxes

Recoverable taxes are substantially represented by credits of Tax on Goods and Services (“ICMS”, the Brazilian VAT), Contribution for Social Security Financing (COFINS), Social Integration Program (PIS), IRPJ, and CSLL.


	Parent				Consolidated
	06/30/2018		12/31/2017		06/30/2018			12/31/2017
ICMS		—		—		637,996			580,630
Provision for ICMS losses ⁽¹⁾		—		—		(70,850	)		(72,076	)
PIS and COFINS		—		—		322,786			348,333
IRPJ and CSLL		88,667		81,755		402,643			295,172
Value-Added Tax (IVA) of foreign subsidiaries		—		—		34,439			27,180
Others		—		—		42,370			15,587

Total		88,667		81,755		1,369,384			1,194,826

Current		39,982		33,070		965,672			881,584
Non-current		48,685		48,685		403,712			313,242

⁽¹⁾	The provision for ICMS losses relates to tax credits that the subsidiaries believe will not be utilized or offset in the future based on its estimative, and its movements are as follows:


Balance as of December 31, 2017	72,076
Additions, write-offs and reversals, net	(1,226	)

Balance as of June 30, 2018	70,850

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

8.	Related Parties

a.	*Related Parties*

•

Parent Company